What's the best way to transfer money overseas from Australia?

Australians send billions of dollars overseas every year, but if you need to transfer money to a friend, loved one or someone else internationally, how do you go about it, and what factors should you look for to save on costs?

What is the best way to transfer money overseas?

There are numerous ways to transfer money overseas from Australia, and depending on your needs, different options could be suitable for you. In general terms, the most common ways you can transfer money overseas involve using:

Bank transfers

A bank transfer, otherwise known as a telegraphic,  wire or SWIFT transfer, involves moving funds directly from your bank account to an overseas account. These can generally be done online, including via your bank’s mobile app, or in person at a branch.

Moneysmart warns that if you choose this method, it can be an expensive choice. The exchange rate is generally “less competitive”, and bank transfers can take up to five business days to go through.

Money transfer companies

A money transfer company is a company that specialises in moving funds overseas. Typically, they may operate online or in person, and will allow you to transfer funds either directly to a bank account, or arrange for the funds to be picked up in cash at a local branch.

Moneysmart says that money transfer companies are “usually the cheapest way to get money to someone overseas”, and are usually faster if done in person than online, although they warn that transferring money in person may attract higher fees.

International money orders

An international money order is when a bank gives you a cheque, also known as an international bank draft, that can then be posted overseas to the recipient. The recipient can then cash or deposit the cheque at their institution of choice.

Moneysmart says that while international money orders are more secure than sending personal cheques overseas, they are generally slower and more expensive than transferring money using other methods, such as online money transfers.

What should you consider when transferring money overseas?

If you need to transfer money overseas, important factors to consider include the exchange rate (and any exchange rate guarantees), the fees and charges attached to the transaction, the time that the transfer is likely to take and the transfer limit.

The exchange rate

The exchange rate means the value of one currency for the purposes of converting it to another (e.g. one Australian dollar might be worth 70 US cents). It may be advisable to research exchange rates before transferring money, as they can vary between providers, and if you shop around, you may be able to find a more favourable deal.

Some providers may also offer an exchange rate guarantee, which is an exchange rate that’s guaranteed for a specific period of time, typically several days. An exchange rate guarantee can offer peace of mind if you are concerned that a rate might change and become less favourable between the time you set the transfer up and when it’s completed.

Fees and charges

When transferring money internationally, fees and charges are calculated in different ways. Some providers, including banks, may charge a flat fee based on the transfer amount and destination. Other services, such as PayPal, may charge their fees as a percentage of the amount you’re sending, meaning fees may be low for smaller amounts.

Some international money transfer services may advertise transfers with no fees, but in this case, it is possible that their fees are built into the exchange rate that they are offering, meaning you may not necessarily save money by transferring with them.

Transfer time

Depending on the service you use, international money transfers can be instant or take just a few minutes, while others can take anywhere up to five business days, according to Moneysmart. Australia’s major banks typically say that it will take between 2 to 4 business days for an international money transfer to go through. CommBank, for example, says that International Money Transfers (IMT) usually take three business days, but that this may vary depending on the recipient’s country and bank. With CommBank, transfers made on a weekend, a public or bank holiday or after the currency cut-off time will be processed the following business day.

Transfer limit

Many banks and providers will set international daily transfer limits for online, branch and phone transfers, so it is important to check this before transferring money. A survey of providers on Canstar’s database showed that some have daily online transfer limits as low as $5,000, while some set the daily online limit at $50,000 and above, and others have no daily online limit.

Of the providers on Canstar’s database offering international money transfers at branches or on the phone, many do not have a daily limit. Depending on the sum you intend on transferring, it may be a good idea to  check your chosen provider’s daily limit, as well as processing times, ahead of transferring money overseas.

How can you save on costs when transferring money overseas?

If you want to save costs when transferring money overseas, some important considerations include the exchange rate, and the fees a provider may charge you.

One of the main ways that international money transfer providers make money is by charging above market exchange rates.  The Reserve Bank of Australia (RBA) publishes daily exchange rates, so before transferring money, you can check your provider’s exchange rate against the most current Reserve Bank rate to see how closely they match up.

In terms of fees, the ACCC’s foreign currency conversion services inquiry found that Australia’s big four banks – Commonwealth Bank, ANZ, NAB and Westpac – are “consistently more expensive” than other suppliers for international money transfers.

If you’re looking to save costs, you may want to consider broadening your search to non-bank providers for competitive fees and an exchange rate that lines up with the current Reserve Bank rate. It is a good idea to compare a number of providers to find one that provides overall value based on your personal needs.

How can you compare international money transfers?

If you want to know more, you can compare international money transfer providers with Canstar. When comparing, consider the destination and the amount you wish to send then see which provider may be suitable. This may give you a picture of the options currently available in the market.

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